The IPD Forestry Index is calculated from a sample of private sector coniferous plantations of predominantly Sitka spruce in mainland Britain. As in previous years, forests in south Scotland performed best, while the 140 forests in the index had a total capital value of £187.6m.
In 2011, the IPD forestry index showed a total return of 34.8% for the year, 14.8 percentage points higher than the 20% total return seen in 2010. The 2011 total return represents the best annual performance since the inception of the index in 1992 and continues the recent trend for very strong performance. The three-year annualised total return of 21.6% is nearly triple the 7.7% annualised total return achieved over the past 19 years.
The decade to the end of 2011 has seen continued strong performance, with annualised total returns of 21.6%, 20.4% and 13.9% over three, five and 10 years, respectively. This performance should be noted for its superiority over commercial property, residential property, rural property, equities and gilts, in all cases over three, five and 10 years.
"Forestry has always been seen as a long-term, safe haven," said Confor’s executive director, Chris Inglis. "It performs particularly well in times of austerity, when other asset classes are less attractive. It is also interesting to note that owners are not rushing to sell, despite increasing demand."
IPD provides an independent analysis of investment performance of a range of assets, including commercial forestry. The service is paid for by a group of sponsors including Confor and the Forestry Commission.
"The IPD index provides a valuable independent reference for forestry, bestowing a professionalism recognised by investors," said Alastair Sandels, of Fountains Forestry, who chairs the sponsors group. "It is vitally important to maintain continuity of data and I therefore urge all businesses with an interest in commercial forestry to come forward and support the index."
